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Inherited HMO

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Case Study
Inheritance Tax on an HMO

Background

November 2019

After the sad passing of their father, our clients inherited eight tenanted flats across two buildings. Initially valued at £1.48m & £1.39m for the purposes of probate, the properties had around £900k debt remaining.

Due to the complexity of the case, when the clients got in touch with our team they had already spent two years struggling to find a broker that fully understood all of the requirements and could find them a viable solution for the estate.

Duncan Winsland

Buy to Let & Bridging Specialist
Duncan Winsland Buy to Let and Bridging Specialist

If you are looking for expert advice, you can get in contact with Duncan today by calling 08009499410 or by sending him a quick email

The Challenge

The complexity of the situation was finding a cost-effective structure for the clients to transfer the eight properties from the estate into an SPV mortgage. Speaking to other brokers, the clients had been told that the only way it could be done was via Bridging Finance, a solution that would have cost them tens of thousands of pounds in interest and fees.

From a legal standpoint, the clients’ solicitors had informed the duo that the property had to be transferred into their personal names before anything else could happen. Concerned about the tax implications of this, the clients sort further expert advice and discovered The Buy to Let Broker through a simple online search.

Our Strategy

Like all of our cases, Duncan started out by calling the clients to take the time to fully understand all of the finer details of the clients’ situation. By knowing the full background, the clients’ hopes and any potential issues armours the broker’s advice and allows our advisors to leverage our clients with better mortgages and lower interest rates.

Although all of the clients’ previous brokers had not been able to find the right solution, Duncan’s vast experience in the financial sector meant that he quickly presented a way that would allow the clients to avoid having to use Bridging Finance, and get a more cost-effective rate on a Limited Company (SPV) mortgage.

Bridging Finance Testimonial

What The Client Said

⭐️⭐️⭐️⭐️⭐️ The Client said “I searched for 2 years via multiple brokers trying to secure finance on a very complex probate case. Duncan was able resolve this immediately. He also was able to provide his wealth of knowledge on a number of issues outside of the the normal remit expected from a broker. This knowledge provide invaluable.”

The Results

Property Value£2.16m
Loan Amount£812k & £750k
LTV70% & 75%
Rate3.35% & 3.5%
TermInterest only 5 year fixed over 25 years
Mortgage LenderParagon

Having found the perfect route for the clients to take and negotiating a competitive rate with Paragon, Duncan started the mortgage application process on behalf of the clients.

An additional complication arose during the lender’s valuation as the properties were downvalued to £1.16m and £1m, but were being told that they would still have to pay the huge Inheritance Tax bill on the original probation valuations.

Ever looking to protect our clients wherever possible, Duncan felt it wasn’t right that the clients would have to pay IHT on the higher values even though they were now being told that the properties were worth near £700k less. He took to the phones but was informed by both the clients’ accountants and solicitors that nothing could be done.

Undeterred Duncan soldiered on and continued to push the agenda with all parties involved and even partook in a 3-way call with the solicitor and accountant on the clients’ behalf. Advising the client to take the case to a barrister, the client followed Duncan’s advice and won their case, saving over £240k in tax alone.

The mortgage was now able to move to completion and the finance was fully secured in less than six months from the initial call, after having been told for two years that it was a lost cause. Duncan’s wealth of knowledge, passion for quality advice and determination saved the clients time, stress and overall a lot of money.

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No matter how complex your property requirements may seem to be, Duncan and our full team of our mortgage advisors will be able to find the right solution for you. To get your finance problem solved now, call us today on 08009499410 If you are in a hurry, you can also request a callback by simply entering your details below.